What Is Retrenchment?

The impact of retrenchment can be devastating. Here are some practical hints.

Retrenchment / loosing your job is rated as one of the most stressful events one can encounter - possibly life changing in countries where the economy doesn't grow fast or remains stagnant. Unfortunately, job security is a thing of the past, so preparation for being out of work means all the difference to the way you handle the situation if it happens to you.

The Impact

Perhaps most devastating is the emotional impact, especially if you derive too much worth from your vocation. For many people, what they do also gives them status and worth.

When one or both providers of a family lose their source of income, many corporate benefits previously taken for granted may also fall away and suddenly become liabilities. Without a steady income you no longer qualify for loans and credit facilities and the annual holiday is no longer a given. "What do you do for a living?" becomes a dreaded question.

Retrenchment also brings uncertainty. How long will this period last, what do we do next, should I try something new, should I start my own business, what if it fails? Unfortunately no one can predict the length of time, and for every person for whom retrenchment provided an opportunity to successfully pursue a lifelong passion, there are some who lost all their savings in the wrong venture or through prolonged unemployment.

Retrenchment, therefore, hits from all sides. If not managed it can result in depression and damage your most important relationships.

Responding to Retrenchment

Each one probably copes with retrenchment differently, but here are some lessons that made the transition easier:

Tell the truth

Denial can only prolong recovery and also exclude you from much needed support from family and friends. The way we handle this challenging phase can become a powerful witness and example to others - especially our children, who can not be protected from experiencing the challenges of living in our times. It is also important to remember that you did nothing wrong.

Do not withdraw

The question on what you do for a living, the loss of status at work, your own fears and uncertainties, and progressive unease as the period of being unemployed drags out, all lead to a tendency to withdraw. This option denies you one of the most important means to recovery, namely networking. It is well known that traditional ways of seeking employment (e.g., applying on adverts and sending out your resume) has very limited success, and that the most effective way of finding work is through networking and referrals. Maintaining a neat appearance while actually seeking opportunities to meet others, exchange ideas, and explore opportunities is a far better response. Many opportunities (employment or business) are not published or advertised; many people prefer to appoint a person based on personal recommendation.

Seize the opportunity

Use this time to reassess your real interests, talents and gifts. Studies show that many people do not enjoy their work and believe that they may be in the wrong job. If you are one of these people, you may just be able to pursue a real interest.

Explore more than one route: do not bargain on formal employment (working for a big company) only. All indications are that the nature of employment is changing from stable to one marked by risk, opportunity, and the selling of skills to companies on a short-term, contractual basis. Also consider the entrepreneurial route. For both the need of lifelong learning will be critical as markets become more dynamic, requiring broad skills and cross training from the workforce. Your challenge lies in remaining "employable".

Money matters

Here the best motto is : Be careful!

- There are many "advisors" who will gladly help you part with your severance package and other savings. Too many people invest their earnings in "opportunities" that fail, thereby losing literally everything. It is important to seek careful advice from more than one prudent source.

- For as long as possible, do not use money set aside for retirement. Consider it inaccessible: rather reinvest it.

- Do not make any hasty decisions. Be especially careful of "opportunities" to "act quickly" or the "opportunity is only available for a short while" type offers. Think, seek advice and wait until you have peace and confirmation before acting.

- Scale down immediately. Get the co-operation of your family in the implementation and careful monitoring of an expense budget. You may be forced to stretch your funds for longer than anticipated. What can you do without? Immediately discontinue any credit facilities.

- Keep paying life and retirement policies for as long as possible. Try not to cash them in; you lose far more than you gain. If you can, ask family and friends to assist in keeping up your contribution.

Negative vs positive energy

Do not waste time and energy on negative thinking such as "why me?" Life consists of challenges and opportunities for growth. Being helped out of a comfort zone will force you to consider a host of alternatives. The trend whereby big organisations reduce costs and reduce jobs is bound to continue. The new opportunities lies in entrepreneurship and with medium sized growth companies, started by the champions of tomorrow.

© High Speed Ventures 2011